DARTMOUTH BUSINESS JOURNAL

April 3rd, 2009

“Changing
times in a
changing
economy”

Winter Issue Table of Contents

Evolution of Subprime: The Politics of Home Finance Kunal Arya
The burgeoning downfall of the credit market has brought the American economy and
worldwide banks to its knees.

A Misplaced Grab at Power Alex Lucey

When a growing Russia shut off the flow of natural gas to the Ukraine and most of Europe in
2006, the world witnessed an audacious grab for power.

A New Spark for Solar: Something New on the Horizon Kunal Arya
The solar sector represents an attractive, alternative solution for large scale energy production
due to its environmentally friendly nature and potential to achieve economies of scale.

Funding Crunch at Bank of America David Kellenberger

Bank of America has recently been infused with $20 billion dollars from the government to
make up for major losses from its acquisition of Merrill Lynch.

Interdependence: The Bane of Asian Markets Michael Joseph

A few years ago, the rage on Wall Street had been the “Emerging Markets.” Investors were
buying into companies such as the Aluminum Corporation of China, Yanzhou Coal Mining
Company, and Chinese Life Inurance.

Tato Nano: India’s new Kedar Mulpuri

With its sleek design, eco-friendly emissions and highly affordable price, the Tata Nano stands
to be one of the most memorable auto inventions by an Indian car manufacturer.

Interview with Pier Carlo Trucco of Keydos Giulia Siccardo  

Pier Carlo Trucco is the current managing director, co-founder and main shareholder of Keydos,
a management-consulting firm based in Milan and Rome, Italy. He holds an MBA from UCLA
and made his career as a partner in large multinational consulting firms including Ernst & Young
and Deloitte Consulting.

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DARTMOUTHBUSINESS JOURNAL April 3rd, 2009
Evolution of Subprime:
The Politics of Home
Finance
By Kunal Arya
The burgeoning downfall of the credit
market has brought the American
economy and worldwide banks to its
knees. Massive criticism of corporate
greed and misguided policies have left
many citizens wondering about the
health of the once vaunted American
capitalist system.
The evolution of the credit crisis
was a result of a set of growing trends
in political and financial thought.
Although there is considerable dissent
among economists as to how large a
role the subprime market played in the
financial collapse, it was clearly
responsible for the failure of Bear
Stearns’ hedge funds and the erosion of
general business confidence that has led
to current market volatility. Thus, an
examination of the policies that the
Clinton and Bush presidential
administrations set into place is critical
to fully understand the current economic
crisis.
In a recent article, Joseph R. Mason,
a Senior Fellow at the Wharton School,
explained the political concept that
drove pro-homeownership mortgage
credit policies. For Bill Clinton, politics
was all about “the economy, stupid,” and
promoting homeownership was the way
to show Americans how hard he was
fighting for their standard of living.
When President Bush came into office,
he brought along the ideological
framework of an American “Ownership
Society,” into which encouraging
homeownership fit perfectly. Therefore,
the political framework for the housing
boom was bipartisan in nature.
Based on these political motives, the
Clinton administration began a policy
push to increase homeownership. In
1994, the U.S. Department of Housing
and Urban Development (HUD) under
the direction of Secretary Cisneros,
devised the “National Homeownership
Strategy,” an unprecedented cooperation
2
between government and a myriad of
participants in the housing market,
including Fannie Mae and Freddie Mac.
Its goal was to achieve “an all-time high
level of homeownership in America
within the next 6 years” (Rosner 2001).
A central component of the strategy was
“creative financing,” which would allow
borrowers to purchase homes even if
they lacked income to make the
payments. The strategy lauded recent
strides to reduce down payments for
low-income homebuyers, who often had
insufficient saving patterns impeded
them from accumulating enough cash to
cover the down payment.
Those who formulated the plan
realized the possibility for the abuse of
its stipulations. Therefore, they created a
list of over a hundred action items that
contained prerequisite warnings of
possible ill effects and advice on
preventative measures to combat them.
Unfortunately, the coalition of public
and private firms that finance, service
and sell mortgages ignored these
suggestions. Despite the warning of
politicians, the “siren song of
homeownership” and its political
benefits seduced the lenders into
ignoring the safeguards (Mason 2008).
politicalhumor.about.com
To be fair to the politicians, on the
surface it looked like the strategy was
working perfectly. Homeownership was
booming: up to 67% in 2000, well on its
way to reaching the record highs seen in
2007. However, the Strategy created
three categories of borrowers. The first
category was the one it was originally
aimed at: renters who could now afford
their dream of homeownership. The two
other categories, however, were abuses
of the strategy. Some used the lax
regulation to misrepresent loans and
defraud the system, showing that stricter
oversight was clearly necessary. Perhaps
more importantly, homeowners would
use the financial leverage present in the
new creative financing tools to either
supplement their income with a cash-out
refinance or trade up to a larger house
before they could actually afford it.
(Mason 2008) This trend was a large
demand driver for the housing bubble
that would form in the late 1990s and
eventually burst in 2008.
As demand for housing grew due to
the availability of mortgages, the
housing sector boomed. When the
Federal Reserve under Greenspan
 further cut interest rates to avoid a deep
recession after the tech bubble burst, a
DARTMOUTHBUSINESS JOURNAL April 3rd, 2009
first or larger home became an even
more appealing investment for many
Americans. This massive growth in
demand prompted innovation in finance
markets to be able to supply capital to all
of these homeowners, some of who
were not exactly traditional low-risk
borrowers (Goldfarb and Klein 2008).
With demand outstripping available
capital, along with lax regulations and
the desire of lower-income Americans to
avoid down payments, the subprime
market was born.
The idea was to sell home loans to
people at higher interest rates who
would not be eligible for traditional
prime rates, then package large amounts
of loans together and sell them as
securities on Wall Street in order to raise
A Misplaced Grab at Power
By Alex Lucey
When a growing Russia shut off the
flow of natural gas to the Ukraine and
most of Europe in 2006, the world
witnessed an audacious grab for power.
Several times since then—for instance,
during the invasion of Georgia or the
2009 shutdown of gas to the Ukraine—
Russia has shown its muscle and dared
the international community to challenge
its actions. Up until recently, it has done
so with impunity. Facing only the
divided powers of the European Union,
a United Nations made impotent by
Russia’s permanent Security Council
seat, and a US lacking international
support with a consumer sector that
would not tolerate further increases in
gas prices. Through the summer of
2008, Russia had nothing and no one to
fear—its former superpower status
seemed within reach. The current
financial downturn, however, has
revealed one thing Russia does have to
fear: itself.
When Russia cut off the gas supply
to Ukraine and the rest of Europe in
3
the necessary capital. Mistakes in the
valuation of these assets were partly due
to a lack of information about
borrowers, caused by looser regulation,
and partially due to corporate conflicts
of interests in the rating agencies. These
mistakes along with lack of oversight led
to massive write-downs when their
values were corrected and the market for
subprime securities collapsed (Mason
and Rosner 2007). Since these securities
leveraged other debts, lenders were left
with a significant amount of subprime
mortgage backed debt they were unable
to valuate. Thus the hedge funds that
invested heavily in subprime debt had to
be bailed out by their investment banks.
For Bear Stearns, this sapped its cash
cushion to the point that lenders became
fearful. Its credit rating was downgraded
and investors made a run on the bank,
early January 2009, state officials
claimed, as they did in 2006, that
Ukraine was refusing to accept market
prices. The Russian government was
forcing Gazprom, the primary natural
gas provider in Russia, to lower its prices
for Russian citizens, so the company
raised the prices of its exports in order
to recoup its losses. While it was true
that Ukraine did not want to accept
higher prices—the cutoff was hardly the
simple cancellation of energy services to
a delinquent customer that Russia led the
world to believe. Just as it did in 2006 in
“The current financial
downturn, however,
has revealed one
thing Russia does
have to fear: itself.”
prompting its sale to J.P. Morgan with a
government guarantee on its debt
(Goldfarb and Klein 2008).
The impact the housing bubble had
on setting off the crisis of business
confidence that stopped the flow of
capital into the economy remains a point
of debate, but the subprime crisis is
undeniably largely responsible for the
current economic problems and
financial meltdown. While many people
can be blamed, from unscrupulous
lenders to Greenspan to borrowers who
did not fully understand the loans they
were taking, the root cause of the
subprime crisis traces back to the
Clinton era “National Homeownership
Strategy,” and Bush’s continued support
for it.
Ukraine and in 2008 in Georgia, Russia
was trying to show the world just how
much power it had. In 2006, Europeans
panicked as the natural gas supply from
Russia abruptly stopped. Though it was
renewed by Gazprom within a few days
(Jolly 2009, Thatch 2007), Russia had
made its point: the rest of Europe was
heavily dependent on its energy
production. The recent January gas
cutoff, however, had consequences that
Russia did not expect.
While many Eastern European
countries reeled from the 2009 gas
DARTMOUTHBUSINESS JOURNAL April 3rd, 2009 cutoff, several of the major Western
European countries had prepared for
such an event with three- and four-
month stockpiles of natural gas.
German officials told reporters on
December 23rd that its stockpiles were
almost completely full (Deutsche Welle
2008). While this is not to say that
Europe can now scoff at Russia’s energy
exports, Russia’s recent behavior has
certainly not achieved the panicked
response that it hoped to hold over the
heads of the EU member states (Thatch,
2007).
Why did Russia feel the need to
“flex its muscles” so soon after its
successful intimidation of the world
through its actions in Georgia? Russia’s
power surge was probably a response to
the singularly huge hit that its
undiversified economy took this past
fall. While the Dow Jones Industrial
Average lost a record 34% in 2008, the
Russian stock market lost more than
70% over the same time period (BBC
2008, Kramer 2008). Much of this
stemmed from the subprime mortgage
crisis that has plagued the world. Just as
crippling, however, has been the
plummet in oil and natural gas prices
that so much of Russia’s market depends
on. Such a drastic fall in the Russian
stock market and in the prices of its
largest exports has led and continues to
4
lead to a diminished status in a world
now ruled more by money than by the
size of one’s military. On top of this
diminished international standing, Prime
Minister Putin’s support has decayed,
because it is largely derived from his past
success in maintaining rapid economic
growth. When the financial crisis hit, Mr.
Putin readjusted the 2009 8.1%
projected GDP growth to a lower 6.7%
projection. Since then, 6.7% growth
became a distant dream, and Russia has
been forced to acknowledge that it is in a
recession (Kramer 2008).
The 2009 Russian gas shutoff also
highlighted the weakening effects of
dependence on foreign gas in Europe.
Even the countries that felt less
threatened by this are becoming more
wary of an ever-desperate, disturbingly
corrupt Russian energy sector. This may
manifest itself in an unexpected way: the
development of sustainable or
“alternative” energies. In Europe, where
gasoline consistently costs more than $8
per gallon, the prospect of similarly high
natural gas prices has made the value of
energy independence skyrocket. The
timing could not be better: Barack
Obama’s energy-focused stimulus plan
could provide for collaboration with
Europe on research into improved
efficiency and lower prices of
alternative-energy sources, jumpstarting
their use around the world.
In light of all of this, it is easy to see
why Russia felt the need to put on
another display of power: it was trying
to show that it will maintain its
economic growth and dominance
through any means possible. However,
this aggressive attitude—coupled with
the charges of corruption made against
Gazprom and uncertainty about the
Russian government’s economic policies
—will end up further damaging Russia’s
economy. A United States-European
Union joint force to develop alternative
energy would be devastating to
Gazprom and Russia, sharply
diminishing demand for their natural
gas. Consequently, investing in Russian
energy production and exports is very
risky. Today’s markets are ruled by risk-
aversion, and Mr. Putin may have further
crippled his country’s economy—and its
power—in his haste to show just how
strong Russia is.
DARTMOUTHBUSINESS JOURNAL April 3rd, 2009

“The future of solar power depends upon its

price competitive technologies in centralized
power generation”

A New Spark for Solar

Something New on the Horizon
By Kunal Arya
The solar sector represents an attractive, alternative solution
for large scale energy production due to its environmentally
friendly nature and potential to achieve economies of scale.
The capability to scale solar energy production to meet all of
humanity’s electricity generation needs is enormous; the sun
radiates 3.8 million EJ of energy to the earth every year, 200
times our current rate of use (Boyle, Everett, and Ramage
2003). However, other sources of alternative energy like wind
and hydroelectric power presents considerable competition for
investor capital. In order for the solar sector to withstand the
competition, the future of solar power depends upon its price
competitive technologies in centralized power generation.
Currently, Concentrating Solar Thermal (CST) system presents
the only viable solution, which still remains more expensive
than other sources of alternative energy. This economic
equation will soon change due to SkyFuel Corporation’s
development of the SkyTrough™. SkyFuel’s inventions have
allowed it to reduce the cost of CST arrays by 35% and will
allow CST plants to deliver electricity at rates lower than
those of wind or other forms of solar technology (Worldwide
Videotex 2008).
CST systems use long parabolic mirrors to focus sunlight
on a vacuum pipe that runs through the trough of each
mirror. The mirrors and pipe move throughout the day to
maintain the focus on the pipe. The pipe contains a heat
transfer fluid (traditionally an oil derivative) that carries the
collected heat energy to a heat exchange system, effectively
converting water into steam. The steam drives steam turbines

5
DARTMOUTHBUSINESS JOURNAL April 3rd, 2009 and produce electricity (NREL 2009).
One major advantages of CST lies in
its applicability to current turbine
systems present in most power plants.
“Recycling” turbines in this manner
enables conversions from fossil fuel to
CST plants at very low cost, making
CST easily scalable if energy demand
increases (NREL 2009). CST can also
easily and cheaply store energy in the
heat transfer fluid with almost 100%
efficiency. A CST power plant can thus
draw on the heat in the fluid (stored
during the day) at night to continuously
produce electricity (SkyFuel Inc. N.d.).
Solar panels only produce electricity
during the day and wind power is
naturally intermittent, hence
disqualifying both from becoming
major supports of a power grid.
Furthermore, CST has proven its
reliability: CST has been used in the
United States since the parabolic
collectors at the SEGS plants in
California for nearly 20 years. Among
the options for alternative energy
production, CST plants may prove to be
the primary means of producing the
constant power supply necessary to
become a substantial part of electricity
production.
Because of these advantages, CST is
projected to grow massively, with
research reports predicting that 12 GW
of CST capacity will be installed by
2020, almost all of it in large plants over
100MW (Bradford, Wayman, and Grama
2008). Recently, political concerns about
high natural gas prices, pollution from
coal plants and climate change have led
to many states passing renewable energy
mandates. This assures demand for new
CST plants as utilities search to meet
environmental policies like the
California Renewable Portfolio Standard,
which mandates that 20% of the state’s
electricity must come from renewable
sources by 2010 (CPUC N.d.). However,
the problem with CST systems lies with
its cost, not its efficiency. Fields of huge,
precisely shaped, breakable glass mirrors
are extremely expensive to build and
6
maintain. And even a cutting-edge CST
plant must charge more than 13 cents
per kWh, a standard price for wind
power (Francis 2008).
SkyFuel is positioned to capitalize
on CST growth because it presents an
ingenious solution to the cost problem.
SkyFuel’s system, SkyTrough™, uses its
patented Reflectech™ mirror film in the
parabolic reflector troughs instead of
traditional glass mirrors (NREL 2009).
Reflectech™ mirror films are similar to
plastic, consisting of many polymer
layers over an inner layer of pure silver
that gives it reflectance equal to a
parabolic mirror (NREL 2009).
Furthermore, Reflectech™ is
shatterproof and significantly lighter
than heavy glass mirrors (NREL 2009).
Reflectech™ is so light that it can be
laminated to aluminum sheets to create
larger panels than the largest feasible
glass mirrors, increasing accuracy of
light concentration (and thus efficiency),
while decreasing assembly costs
(Worldwide Videotex 2008). Since the
support apparatus of SkyTrough™ can
maintain lower weight than glass
mirrors, engineers could use a tubular
aluminum space frame that is 30%
“SkyFuel [is] cheaper to
build and significantly
cheaper to operate than
any other CST system on
the market today."
lighter (Worldwide Videotex 2008). The
space frame not only lowers weight
strains, but also allows easier
installation, hence reducing labor costs
(Worldwide Videotex 2008).
These benefits aggregate to make
SkyTrough™ 35% cheaper to build and
significantly cheaper to operate than any
CST system on the market today.
Additionally, Reflectech™ films
eliminate the bottleneck in the parabolic
trough production process (making the
sagged glass mirrors) allowing SkyFuel
to rapidly produce SkyTroughs™ and
reducing lead time for orders
(Worldwide Videotex 2008). Armed with
this innovative solution to its cost
problems, CST power is positioned to
supplement the conventional means of
electricity production in the United
States.
 Funding Crunch at Bank of America
DARTMOUTHBUSINESS JOURNAL April 3rd, 2009
By David Kellenberger
Bank of America has recently been
infused with $20 billion dollars from the
government to make up for major losses
from its acquisition of Merrill Lynch.
However, with the company’s valuation
plummeting $20 billion more in mid-
January due to worsening write-offs
from the merger, Bank of America's
ability to raise capital becomes
increasingly limited (Hall). With a
market capitalization currently below
$50 billion, down from $350 billion in
2007 (Google), raising capital through
equity quickly becomes ineffective. .
Bank of America is also very limited in
debt options. .
While Bank of America still has a
large asset base, its short term situation
looks increasingly scary. If the company
cannot absorb its own write-offs as well
as that of Merrill Lynch’s, the only
suitable option may be another major
government bailout. That would add
another $20 billion to the already
received $118 billion from the
government as a backstop for bad debts
(Moore).
It is a bad sign for the U.S. economy
when our largest bank, a pillar of
capitalism, stands to fail. The
consolidation of banks only works so
long as the largest players have the
ability to keep their own heads above the
water. While the government could not
and would not let Bank of America fail,
“Our largest
bank, a pillar
of capitalism,
stands to fail”
7
Bank of America will need more help
to survive, if the economy plunges
further than expected.
Publically traded companies can be
made vulnerable through their stock
valuations, and this has dangerous
implications for Bank of America.
Though previously thought of as
impenetrable in terms of assets, even the
largest of corporations have proven to
be vulnerable to the tides of the
markets. Even corporations as large as
Bank of America can be exposed to the
fury of the markets. We have recently
seen many large financial corporations
go under or need the government to
take control to step in with major plans
to reinvigorate the company. Now it
seems quite absurd that However it is
absurd that Bank of America, a bedrock
of American banking that helped the
government to refinance the banking
industries in past crisis, is in danger of
failing. In the past the government
turned to Bank of America to
consolidate and refinance the banking
industry when a crisis struck. However
now we see that Bank of America itself
is threatened.
The severe lack of investor
confidence in the current economy
threatens the core of Bank of America's
finance. The problem that lack of
investor confidence poses to Bank of
America’s business model are quite
severe. This coupled with its recent
below-par performance, Bank of
America lacks the ability to raise cash to
cover With tight credit markets as well as
a low stock price it will be hard for Bank
of America to raise cash to cover short
term losses. While past their balance
sheet has performed admirably, been
historically strong, the bank's current
assets stands to fail. currently their short
term situation is a dangerous one. If
they cannot pay the monthly bills, then
the loss would be sent to the
government. We’re going to see more
government aid. Unless steps are taken
privately to recoup the losses and
reinvigorate Bank of America in the
short term, we will once again see the
government respond. The majority of
the losses are already inevitable, yet Bank
of America must maintain still work
hard to keep their current operations as
steadily and efficiently as clean and
efficient as possible.
 Interdependence –
DARTMOUTHBUSINESS JOURNAL April 3rd, 2009

The Bane of Asian Markets

By Michael Joseph
A few years ago, the rage on Wall Street had “Interdependence on local and
been the “Emerging Markets.” Investors were foreign economies has led to a
buying into companies such as the Aluminum
crash in the rapid growth of Asian
Corporation of China, Yanzhou Coal Mining
Company, and Chinese Life Inurance. As recently markets.”
as May of 2008, officials at JP Morgan’s Asset
to economic activity outside of the region
Management division recommended raising
(Burton).”
exposure to Asian markets (Pichardo). Yet the
This interdependence on local and foreign
financial crisis on Wall Street seems to be making its
economies has led to a crash in the rapid growth of
way over to Asian markets as regional economies
Asian markets. Tokyo’s Nikkei Index has fallen to
experience their own slumps. How did these once
its lowest levels in nearly five years coupled with
“hot” emerging markets slow down and will they
huge drops in the Hong Kong and Indonesian
make a come back?
Indexes and Chinese Banks. The financial crisis in
In 2003, Horst Kohler, Managing Director of
the US has greatly affected Asian markets, especially
the International Monetary Fund, stated in a
China, because of this interdependence effect,
conference Malaysia, “…Asia is poised…to grow
which has caused a spillover effect into all regional
faster than any other region in the world.” He went
countries (Pylas).
on to comment,
According to Mark Tan, a managing director at
“Emerging market countries in Asia have
UOB Asset Management in Singapore, “Everyone
clearly benefited enormously from economic
is losing confidence…The problem now is that the
globalization…There is tremendous potential for
lack of foreign confidence could affect the Asian
further long-term growth in the global economy…
consumer, which would lead to a bigger slowdown
[Asian markets] are well-placed to…seize
in Asia than expected (Pylas).”
opportunities in the international market place to
It would seem the global economy is crashing
become a major engine of growth in the global
and burning and Asian markets, inevitably
economy (Kohler).”
dependent on the rest of the world, are following
David Burton, Director of the Asia and Pacific
suit. Yet in the long run, these emerging markets
Department of the IMF, expressed the same
still seem to be highly lucrative. The GDPs of
sentiments at the 2004 IMF conference in Hong
developing countries are not expected to slow
Kong (Burton).
substantially from recent years. Emerging markets
The obvious outlook for the future in these
have historically tracked with G7 economic
Asian markets was a bright one. Yet concerns were
indicators. The G7 is a financial gathering of seven
expressed even back at the 2003 IMF conference.
industrialized countries, including the USA and UK.
Kohler stressed the importance of economic
Because these emerging markets have closely
dependence of Asian markets on growth in the US
followed the economic trends of the G7 countries,
and the possible spillovers of economic shocks
they are highly dangerous with the apparent
across country borders because of this growing
recession of the US and Europe (Demos). But
globalization and interdependence.
Asian markets also hold the greatest promise for
Yet more importantly, there has been growing
recovery with industrializing nations and an
interdependence in the local region and dependence
impressive labor force. Asian markets may even
on foreign markets. China’s economic performance
emerge from this financial crisis as the dominant
had significant impact on other local economies.
force in the global economy but only time can tell.
This is noticeable in the fact that Chinese exports
For now, all we can do is wait.
to other countries in the region have risen from
20% in 1970 to 40% in 2002. As Burton states
though, “…perhaps only about half of this trade is
going to meet intra-regional final demand. Thus a
bulk of the exports of Asian countries is still linked

8
DARTMOUTHBUSINESS JOURNAL April 3rd, 2009
Tato Nano
India’s Latest Pride
By Kedar Mulpuri
With its sleek design, eco-friendly emissions and highly affordable
price, the Tata Nano stands to be one of the most memorable auto
inventions by an Indian car manufacturer. On January 10th, 2008,
Tata Motors Limited, a subsidiary of the renowned Tata group,
dazzled the world with the design for the Tata Nano at the 9th
annual Auto Expo held at the Pragati Maidan in New Delhi, India
(Mohanty). Since its debut, the Tata Nano has gathered international
attention for its production.
On the day of its introduction to the international community,
Mr. Ratan N. Tata was quoted saying, “Tata Motors’ engineers and
designers gave their all for about four years to realise [sic] this goal.
Today, we indeed have a People’s Car, which is affordable and yet
built to meet safety requirements and emission norms, to be fuel
efficient and low on emissions. We are happy to present the People’s
9
“Other car companies are
certainly impressed with the Tato
Nano’s ingenuity in design and
are looking to emulate the
affordability of the car in their
models.”
Car to India and we hope it brings the joy, pride and utility of
owning a car to many families who need personal mobility.” (BBC)
Holding the Guinness Book of World Records position for
cheapest car at a starting price of Rs. 100,000 (~$2000 USD), the
Tata Nano was designed for the working class in India. (Majumbdar).
Currently, there are more two-wheelers (motorcycles, scooters, and
mopeds) on the road than cars in India. Tata Motors seeks to change
that by targeting a crowd that would otherwise purchase two-
wheelers. In addition to its affordability, the car is also known for its
fuel efficiency, boasting a gas mileage of 20 km/liter (~56 mpg).
(Autocar).
The production of the Tata Nano holds many promises for
both domestic and international markets. Firstly, the Tata Nano is
projected to expand the Indian car market by 65% according to the
rating agency CRISIL. (India Times). In fact, in anticipation of the
DARTMOUTHBUSINESS JOURNAL April 3rd, 2009 Tata Nano, the market for two-wheelers has
plummeted as buyers look to purchase this
new four-wheeled vehicle. The car's fuel
efficiency seems to be a main attractors in a
nation where diesel prices still remain around
50 rupees per liter (~$3.86 per gallon).
With the current energy crisis across the
world, the Tata Nano just might become
world's cure for international consumers. .
With its trendy design, fuel efficiency and
affordability, the Tata Nano will likely spread
to international markets, thus allowing India
an entrance into the car export market.
However, it is unlikely that the car will hit
American or British markets because of its
relatively poor emissions and safety
standards.
In fact, the vehicle is receiving much
backlash from critics due to its poor
emissions from using diesel fuel. In a
country where air pollution has already
reached intolerable levels, any additional air
pollution is unacceptable. Daniel Esty, an
environmentalist at Yale University, sees the
Tata Nano as a source of huge destructive
potential. “This car promises to be an
environmental disaster of substantial
proportions” Esty said (Overdorf). In
response to this criticism, Tata announced its
plans to produce a gas- or electric-variant as
soon as the current model hits the market
(Left Lane).
Countries have also cited the safety
standards of the Tata Nano as hazardous,
calling it a potential deathtrap. However, in a
country where lorries and other large
As the number of
cars increases, the
risk of auto-related
accidents would also
increases, especially
due to India's poor
road conditions and
the lack of traffic
signals
10
vehicles dominate the roads in big cities and ask the Indian government for tax-breaks
villages, accidents will always be a problem; and subsidies in order to lower the prices
auto-accidents claim the lives of about (Ireson).
90,000 people per year in India (The Times). Whatever the future of the Tata Nano,
As the number of cars increases, the risk of the hype surrounding this car has made a
auto-related accidents would also increases, clear statement to to automotive makers
especially due to India's poor road conditions around the world: a car's price tag – not
and the lack of traffic signals. Despite these safety or luxury – will ultimately drive its
speculations, Tata Nano has passed the dominance in developing countries.
international guidelines for the full frontal
crash test, the offset, and side-crash test
(Krishnakumar).
So even if the Tata Nano is not
exported to the international market and
produced exclusively for India, other car
companies are certainly impressed with its
ingenuity in design and are looking to
emulate the affordability of the car in their
models. When asked about the Tata Nano,
CEO of Renault-Nissan Carlos Ghosn said,
“This is really fantastic. This is what we
should try and achieve.” (Tata Motors).
Already, Bajaj Autos is working with Renault
Nissan to produce a competitor vehicle of
nearly the same specifications (Green Car
Congress).
As of now, Tata has yet to announce a
release date for the vehicle (Ray).
Unfortunately, there exist quite a few
setbacks for production. With increasing
material costs, the price of Tata Nano could
be higher once in commercial production.
Because Tata's most unique quality lies in its
affordability, an increase in price could and
would its expected sale figures. As such,
Tata must either use cheaper materials or
DARTMOUTHBUSINESS JOURNAL April 3rd, 2009
Interview with Pier Carlo
Trucco of Keydos
By Giulia Siccardo
What  led  you  to  choose  a  career  in 
management consul3ng?
For a young MBA, that was probably
the most sought-after profession in
Italy and Western Europe. I’m not sure
it still is…
Which  do you feel  was most  valuable to 
the  success  of your  career: your  college 
and  post‐college  studies  or  the 
experience  you  picked  up  on  the  job? 
What  does  an  average  day  of  work  at 
your consul3ng firm entail? 
Frankly: in my Country, a U.S. degree is
quite appreciated in the job market.
That means you get a good start, which
is essential. But, overall, I should say
that what you learn on the field is way
more valuable. Each day, we focus on
results and on project deadlines. This
may, and usually does, result in long
workdays, including weekends. I have
seen American colleagues getting home
at 5 p.m. on a regular basis, though. This
may have many explanations, including a
more efficient way of organizing work
on that side of the Atlantic.
What, in your opinion is the most difficult  airlines hit the economy class passenger
or  stressful  part  of  the  management  market. Alitalia found itself with an
consul3ng  profession?  What  do  you  find  unchanged cost structure but with
most rewarding about it?
11
What is difficult and stressing is also the
most rewarding: client satisfaction is the
key. This is a very difficult and moving
target, especially since competitors do
exist.
Has  your  consul3ng  firm  been  involved  f lag car riers weakened Alitalia’s
with  the  airline  industry  in  Italy? What,  competitive position with the European
in your opinion, led to Alitalia’s decline?
I have worked for the airline industry
and for Alitalia. The projects I’ve been
involved in focused the matter of
alliances and strategic development of
routes.
Alitalia’s decline has come a long way.
We can date it back some 20 years. I
know this may seem like an
exaggeration, but we must keep in mind
that Alitalia, like many European flag-
carriers, used to be a subsidized, state-
owned company. Failure to cope with
the changing market was its main
problem. As the European Union acted
against national monopolies, starting in
the early nineties, two types of
competitors emerged. The first type
would be a European company with a
similar cost structure but possessing a
stronger hold on the market, granting it
a lead in the business traveler segment.
Examples are British Airways or
Lufthansa. T he second type of
competitor was the emerging low-cost
“What is difficult and
stressing is also the most
rewarding: client
satisfaction is the key. This
is a very difficult and
moving target, especially
since competitors do
exist.”
airline, such as Ryan Air or EasyJet.
These names may mean little to an
American, as they are point-to-point
carriers dedicated to serving the
European market. Think of Southwest,
to give you an idea. While the dominant
business passengers and on the
intercontinental routes, the low-cost
declining revenues. As we know, this is
the path to bankruptcy, unless the
government rescues you. However, the
EU rules now prevent governments
from rescuing airlines. So you can guess
what happened then.
So, it went bankrupt?
It underwent a procedure similar to that
involved in Chapter 11 Bankruptcy in
the United States. Then, an industrial
group came and bought the majority of
assets.
The US press has covered this rescue
you refer to of Alitalia Airlines by an
Italian industry group and an impending
investment in Alitalia by Air France.
How is the new Alitalia planning to stay
afloat?
DARTMOUTHBUSINESS JOURNAL April 3rd, 2009 There are controversial opinions on the Motors and Italian automaker Fiat S.p.A. Given the leading role of the American
price paid for the so-called rescue. Most to form a nonbinding, albeit strong economy, any event developing in the
analysts believe that the price paid was connection between the two companies. U S w i l l c l e a r l y a f f e c t E u r o p e.
too low. Furthermore, the government What is the role of consulting firms in Nevertheless, I believe that the crisis will
has suspended the anti-trust regulation laying out the stipulations for this type take different paths on the two sides of
for a period of six months in order to of agreement? the Atlantic (and on the two sides of the
favor the new company’s take-off. British Channel). Continental Europe
European competitors are not exactly I can only guess, having not been will suffer more from the recession than
happy and have appealed to the EU. To involved directly. I suppose management from “toxic finance”(2). The point of
answer your question, I would say that consulting firms may have advised on junction will undoubtedly be the liquidity
the new Alitalia heavily counts on strategy, especially helping define the crunch. However, I believe that from
preferential treatment and the ability to relative roles of the two partners in the now on Obama’s actions will mainly be
take its first steps in a protected future market. Some organization and an American matter, i.e. they will have
environment. project management consulting may limited impact on Europe.
follow. This should take one or more
What,  if  anything,  is  fundamentally  consulting firms that have strong What  is  the  one  piece  of  advice  you 
different  in  the  new  Alitalia  that  will  expertise in the automotive industry. would  give  to  a  college  student 
make it successful? How  has  the  global  economic  crisis  we  interested  in  pursuing  a  career  in 
management consul3ng? 
The financial ratios of the new company are currently  experiencing  affected  your 
are definitely better than in the previous field  of  work? Do you think the crisis has  It takes a real interest in the client to be
version. Now, there appear to be decent hit  Italy  as  hard  as  it  has hit  the United  a management consultant. So, take this
profitability ratios, and the fleet is States? test: if your dream is to spend your life
adequate with respect to the company’s in your beautiful office, don’t go for this
operations. The routes will be focused I will begin by answering the second job. Pursue management consulting only
on one main hub (Rome) while question. Analysts say that Italy may if your dream is to spend your life in
previously there was an ill-optimized perform better than other countries in constant contact with your client and on
strategy based on two hubs (Milan and the present global crisis due to its location in your client’s office.
Rome), which constituted too many for peculiar business environment. We are
a medium-sized airline. Furthermore, the stronger in the so-called real economy
alliance with Air France will help to offer (1) than in financial institutions.
Alitalia passengers a truly global network Although this used to be an issue, it no
w i t h l o t s o f d e s t i n a t i o n s a n d longer is. Our industrial structure is
frequencies. composed of a huge number of small
and medium enterprises. Many
Has  your  consul3ng  firm  been  involved  observers make the point that this will
with  the  Italian  automo3ve  industry?  dilute the risk of corporate failures, if
What, in your opinion, led to Fiat Group’s  adequate liquidity is provided to the
recent successes in that market? system.

Fiat has regained market share in the
past few years, and profitability has
come back. This has been the result of a
more focused strategy, concentrating
efforts on the automobile, as opposed to
other traditional Fiat interests such as
aerospace and industrial automation, as
well as a renewed focus on domestic
markets. I wouldn’t call this a long-
lasting recovery though. In my opinion,
Fiat’s thrust was on the downward slope
even before the present global crisis.
However, it is difficult to support this
opinion with conclusive evidence since
the European market is currently down
40% and Fiat’s stock is performing
accordingly.
The US press has covered the agreement
between American automaker Chrysler
With regard to the management
consulting industry, in theory we should
be well-off, the same way as physicians
prosper when you have some epidemic.
In fact, we may meet the profound need
for reorganization of companies
affected by the crisis. The unanswered
question is: will the patient have money
left to pay for the doctor?
How  is  President  Obama  perceived  by 
the  Italian  business  world?  President 
Obama  and  his  administra3on  have 
announced  plans  to  unfreeze  the  credit 
m a r k e t  a n d  h e i g h t e n  fi n a n c i a l 
regula3ons. What  kind  of  effect  do  you 
think Obama’s new policies  will  have on 
Italian industry, if any? 

12
 Current Officers Contributors Content Editors
Presidents: Rubin Srimal & Alex Gonzalez Business: Content Editors:
Treasurer: Tony Deng Kunal Arya Bryon Alston
Secretary: Alexander Villar Dave Kellenberger Ryan McClafferty
Head of Business Section: Kunal Arya David Rogg Sisi Yao
Head of International Section: Giulia Siccardo Mike Katz Mike Novosel
Head of Investment Section: Kareem Halim William Mergner Nathaniel Kanefield
Head of Interviews: Tony Deng Kihyun Kim
Head Content Editor: Bryon Alston Irfan Mulic
Layout Editor: Jason Laster Alexander Villar
Website Development: Jack Liu Ray Leoni

International:
Giulia Siccardo
Michael C. Joseph
Roberto Marwanga
Alex Lucey
Kedar Mulpuri

Investments:
Kareem Halim
John W. Spradling

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